McDonald’s Sees Price Target Changes Amid Wendy's Issues
McDonald’s shares reach an all-time high, as Wendy’s hits a 10-year low.
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In the world of the stock market, investors often ask, “What have you done for me lately?”
In the case of fast food giant McDonald’s (MCD) , the answer is, “Not much.”
Shares of McDonald's have had negative returns in two of the past four years:
2022: -1.69%
2023: +12.51%
2024: -2.23%
2025: +5.43%
Suddenly, McDonald's Is Cooking
However, the stock’s years of underperformance may be coming to an end. Already this year, McDonald’s has eclipsed its 2025 return, gained 8.02%.
Are investors finally getting hungry for McDonald’s again? Let’s go to the charts to find out.
First, let’s look at the big picture. Despite recent underperformance, this stock has been a juggernaut for decades. An investment in McDonald’s shares at the start of 2006 yielded a return of greater than 850% in 20 years. The stock’s long-term trend is both obvious and impressive.
In the shorter term, McDonald’s appears to have awoken from its slumber. Last week, the stock broke out of a long consolidation to close at an all-time high (point A). The new high was reached after McDonald’s exceeded analysts’ fourth quarter estimates for both earnings and revenues by a modest 2.5%.
In the wake of that earnings report, analysts are raising their price targets. Jeffries raised its McDonald’s price target from $360 to $375. Meanwhile, Argus Research raised its rating on the stock from Hold to Buy, with a price target of $380.
At Least One Competitor Is Struggling
Fast food has always been a highly competitive field, and a recent bout with historic levels of inflation has forced consumers to make some difficult choices. While McDonald’s customers face similar issues, this cloud could have a silver lining.
For instance, consumers are apparently choosing fast food competitor Wendy’s (WEN) less frequently. The fifth-largest fast food chain in the U.S. is planning to close about 300 stores this year, or about 5% of its locations.
Wendy’s reported an 11.3% decrease in U.S. same store sales. The chart of the Dublin, Ohio-based fast food purveyor tells the story in one simple picture.
Why is this good news for McDonald's? Many Wendy’s restaurants are located within close proximity to a McDonald’s. This isn’t necessarily by design, but rather due to the tendency of fast food restaurants to cluster at busy intersections and high-traffic areas.
Is Wendy’s the only competitor having this problem, or is it a symptom of a broader issue? Either way, McDonald’s stands to be a beneficiary of a less-crowded fast food playing field.
At the time of publication, Ponsi was long MCD.
